Nvidia Earnings at the Forefront, Ukraine-Russia War Escalates Further

Rates rise moderately while Nvidia earnings slightly disappoints. Ukraine’s use of UK-supplied cruise missiles against Russia did little to sway swap rates today, which closed 2-3 bps higher across the curve. A weak $16B auction of 20-year Treasury notes contributed slightly to the rise in rates; 20 and 30-year Treasury yields rose ~3 bps in the immediate aftermath of the auction. Meanwhile, the Bloomberg Dollar Spot Index rose 0.4% today while Bitcoin nearly surpassed $95k on increased demand for safe-haven assets. Elsewhere, Nvidia declined 0.76% today and is currently down over 1.9% after hours on mildly disappointing Q4 revenue forecasts.

Fed’s Bowman argues for a cautious approach to rate cuts. Fed Governor Michelle Bowman said today that she views inflation as a prime economic concern and noted that she sees “greater risks to the price stability side of our mandate, especially while the labor market remains near full employment.” Bowman cast a single dissenting vote at the September Fed meeting, where rates were ultimately lowered by 50 bps. Fed President Collins and Governor Cook were more aligned with most Fed officials, saying that additional  policy easing is needed but that the exact path is uncertain. Those remarks follow Collins’ comments last week that inflation is on a “strong trajectory” back toward 2%, despite stalled progress over the past several months.

Nvidia shares tumble after hours. Despite beating estimates for Q3 revenue ($35.08B), Q4 revenue outlook ($37.5B), and EPS (81 cents), Nvidia shares fell after the market close. The move largely occurred due to sky-high expectations for the AI darling, which traded at a P/E ratio of over 57x. Nevertheless, Nvidia continues to impress, and CEO Jensen Huang noted strong demand for new Blackwell chips and robust data center revenue. So far this year, 5-year swap rates have risen 6 bps (February), declined 6 bps (May), and risen 2 bps (August) the day after Nvidia earnings results.